The gathering storm

Yesterday afternoon I addressed a gathering under the auspices of NIPS on the current political situation. I briefly outlined what’s in my column today, Political leprosy (which makes reference to my March 13, 2006 column, Managing expectations), as well as some points raised the paper of Economist Dr. Michael Alba (which I posted, yesterday, at Inquirer Current) and the argument put forward by yesterday’s Inquirer editorial on the repercussions of the Estrada pardon (widely expected to be formalized on Friday).

My column speaks for itself, but here’s two relevant extracts from the pieces I mentioned. First, from Dr. Alba’s paper:

Is there hope for the future? Recall that, from the inference made by Jones (1997 and 2002) on the very long-run evolution of the world distribution of living standards, the Philippines is right on the demarcation line of countries headed for different futures. If it gets its act together–and this is a big if–the country may yet join the high performers that are tending toward high steady-state levels of output per worker. But to do so, it must exhibit a high growth rate (faster than that of the technological frontier) over a long period of time (as Hong Kong, Singapore, South Korea, and Taiwan have done), by persistently pushing out the steady-state level of output per worker to which it is headed, not so much by achieving a higher saving rate, a lower population growth rate, and a higher quality workforce, although these will help because of synergistic effects, but by significantly improving its total factor productivity. Growth and modern development economics tell us, however, that this is not so easily done, because it involves improving the quality of the country’s social infrastructure by taking on the vestiges of our history and culture that are growth-constraining, such as flawed leadership that values loyalty more than competence, an entrenched political and business oligarchy that unashamedly promotes and jealously protects its narrow self-interests, and an incentive structure that is nepotistic rather than meritocratic and that rewards thievery and corruption more than honest, hard work. In particular, three absolutely essential and indispensable elements for social transformation are: an effective, efficient, and high-quality education system, a vigilant civil society that demands high accountability from the government, and a competent, corruption-intolerant government administration of firm purpose committed to reform and transformation.

The lesson Filipinos have learned is that both leaders have more in common with each other and both have more that sets them apart from a public that is as angry at Arroyo’s cash bar as it was over Estrada’s karaoke governance. In other words, after two years of agonizing over who is the lesser evil, the public can breathe easy, seeing how both are two sides of the same debased coin. It is People of the Philippines now versus Gloria Macapagal-Arroyo and Joseph Ejercito Estrada.

Returning to Dr. Alba’s economics paper, he pointed out a dilemma facing our OFW remittance-dependent economy. First, as more people work abroad, and send money home, the more foreign currency they send home, the less it’s worth. The result is OFW income is actually declining.

Add to this another problem: the more Filipinos leave home to work abroad, the less they stand to earn, and thus, the less they can send home, and the less what they send home is worth. This is the root cause behind proposals like the proposed November 1 and 2 Remittance boycott. Besides OFW’s, Filipino exporters have also, by all accounts, been ravaged by the depreciation of the dollar.

Add to this a third factor economists like Alba have noticed: the more Filipinos work abroad, the more their remaining dependents at home are likely to give up looking for work, and the more dependent they end up on those abroad. Short-term, this benefits the government, which can (and has, if you refer to Cielito Habito’s presentation a couple of months ago) then write off Filipinos who have given up looking for work, thereby formally (but not really) reducing those officially classified as unemployed.

Put in another factor, which is unreported in the media but common currency among entrepreneurs and other businessmen: the rampant smuggling of goods, which is also hurting Filipino manufacturers and traders. Simply talk to people with businesses that depend on importation or manufacturing, and you will know the concerns are serious, and resentment has begun to run deep. And you will also know who businessmen consider the godfathers and beneficiaries of smuggling.

Add another factor, which is that the upper and middle class in particular, was willing to tolerate many things about the administration, so long as it maintained the appearance of being marginally more virtuous than the Estrada administration. The handing out of cash to congressmen and governors, however, exceeded any doling-out of patronage in the Estrada years and was even more brazen than in the Marcos years. And the President’s attention to detail and workaholic style seems to have been spent more on manipulating the bureaucracy to approve the ZTE and other deals, than on anything particularly productive.

Add to this the growing realization on the part of military officers that they have to consider their career prospects in a future administration (a reason, I’ve heard it pointed out, that with the retirement of the previous service commanders, current and next-in-line commanders have quietly but effectively put a stop to tolerating extrajudicial killings and abductions, which seem to have subsided), and the realization among the politicians that the President’s solution to party problems –throwing money at people causing problems– has made politics so expensive and so utterly transactional, that they will have to bear the price of this in campaigns to come -and it makes politics a pretty much losing proposition, financially (even with Political Viagra by way of IRAs).

Put together the infighting in the President’s ruling coalition, with the sustained efforts of the various groups opposed to the administration, with the growing dissatisfaction with the President on the part of sectors formerly content to either turn a blind eye to her shortcomings, or who preferred her government to the prospects of a new one before 2010, and you have an administration running out of wiggle room. Not least because the President can no longer trot out her claim (very Nixon-like) that she represents a “silent majority.” If you noticed, her “silent majroty” has been consistently vocal, until now. Since ZTE began, the top 500 Women of Civil Society, the Filipino-Chinese Chamber of Commerce, and so forth have been very, very quiet while the usefulness of organizations such as ULAP has been severely curtailed, because of the payola scandal and clumsy handling by provincial officials (every family dealing with the depreciation of the dollar now has to consider what each congressman’s and governor’s dole out from the President could have done for them, instead, for example). The public hostility to the President over her handling of the Glorietta explosion and the handling by her pet officials hasn’t bolstered the President’s claim to public support, either.

In the same forum, Mon Casiple said that there are several confrontations that will determine whether the President recovers her strength or further dissipates it:

1. After tomorrow’s Senate probe, expect a revival of street protests and rallies. These protests will escalate to heights never before seen in both EDSA 1 and 2. The situation, based on objective analysis of existing conditions, is tantamount to the 1986 scenario. People are raring to protests now and it is just a matter of time. Groups should serve as the trigger.

People are saying that the military should move for the kill first before the people support them. I think this is feasible under present circumstances. A repeat of EDSA 1 is in order. I concur with this observation.

2. The resumption of Congress on November 5, widely expected to be a showdown between the President and the Speaker. Tuesday and Wednesday night, apparently, had meetings of neophyte congressmen at the Palace, which suggests the administration is trying to regain the initiative.

4. The serious resumption of Charter Change will make it clear the President does not intend to step down in 2010.

5. The ability of government to convince the public that it’s solved the cause of the Glorietta explosion.

And, I’d add, the ramifications of a far less cheery citizenry going into the Christmas season, as The Unlawyer points out:

It goes without saying that Philippine retailers were the most adversely affected business sector in the wake of the blast. For example, my company suffered an 11 percent drop in business for this Friday to Sunday weekend period – prime shopping days at that – compared to revenues from previous weekends, although I must say that customer traffic rebounded somewhat on Sunday.

What about in the medium term? The explosion happened during the runup to the 2007 Christmas shopping season, which traditionally starts soon after the All Saints’ Day holidays. Indeed, at least two major Metro Manila malls started their respective pre-Christmas sales promotions on the day of the blast. Philippine consumers will definitely stay away from the malls in the next few days, and if the authorities don’t quickly restore confidence to an apprehensive populace, they may just decide to refrain from shopping for quite a while longer.

Philippine retailers are depending on Christmas season sales for a substantial portion of their 2007 revenues, and it is certainly not an appealing prospect for many of them – of us, I should say – to see our customers frightened so.

Imagine how the retailers will feel as their suddenly-slender margins are further eroded by smuggling.

Blogger Scriptorium, unlike Mon Casiple, thinks the odds are still in the President’s favor in terms of staying in power. The blogger starts off with an interesting analysis of the political scene:

The Philippine political system is best understood if we see its major players as estates divided into blocs composed of factions. An estate, following Weber’s usage, is a group distinguished by its specific social functions and conventions (rather than by mere economic standing, as in the case of a class); blocs are subgroups made cohesive by a common ideology, orientation, or interest, and which are the best Philippine equivalents of political parties; and factions are groups usually united by personal antipathy or allegiance. In the Philippines, the estates would be the Thinkers or “lords spiritual” (its Blocs being the Church, the Left, and the urban intelligentsia); the Warriors (i.e., the regular military, the armed Left, and the criminal and private armies); the Commons (the urban middle class, and the rural electorates); and the Magnates or “lords temporal” (i.e., the political elite, big business, and organized crime). There are other estates and other blocs, but they are not as politically significant.

Based on the above, the blogger breaks things down into three main groups:

(1) Since 1986, the successful removal of a sitting President through peaceful mass action has required a coalition composed of at least one bloc from each estate. Hence, the 1986 EDSA revolt was carried out by an alliance of the Church, the non-aligned intelligentsia, the urban middle class, the military, and the Opposition factions of big business and the political elite; and the 2001 EDSA revolt required the same broad alliance, with the addition of the intellectual Left, which directly participated in the protests.

(2) Of these blocs/factions, the most important have been the military, the Church, the urban middle class (as the popular base of the protests), and the opposition faction of the political elite (which provides the leadership). The absence of any one of these blocs/factions, especially the last, renders removal of a President through peaceful mass action unlikely.

(3) A successful removal through peaceful mass action requires a correlation of forces that favors removal; that is, in leadership, will, and political strength, the pro-ouster coalition must have the advantage over the administration. Thus, the 1986 coalition was marshaled against a regime weakened by economic crisis, the President’s wasting illness, and the attacks of the intellectual and armed Left; and the 2001 coalition confronted a President whose main political base was the isolated and untested urban poor, and who had neither the skill nor the machinery to counter-mobilize.

The blogger points out that the Catholic Church lacks a Cardinal Sin, and the political class either a Ninoy Aquino willing to embrace martyrdom, or a Doy Laurel willing to subordinate his ambitions; and because of these, the military is, in a sense, incapable of moving (for the same reason, the German military proved incapable of challenging Hitler; it’s interesting to me that the blogger compares the current AFP mentality to the old Prussian military mentality that equated professionalism with blind subordination to the state). Anyway, the blogger then concludes,

At present, however, the preconditions for successful removal of the President through peaceful mass action simply do not exist, as was amply demonstrated in the almost-successful ouster attempt of 2005.

To begin with, the main social blocs have been isolated, neutralized, or weakened. For one, the urban middle class, especially the all-important 18-35 age range, is sheltered from economic pressure (like that faced by the urban poor) by the existence of outsourcing and emigrant (OFW) employment, which also siphons off discontented urban intellectuals; and it is diverted from politics by the expansion of the emigrant- and outsourcing-driven consumer market. (Some writers, in fact, have noticed the discrepancy between the youth that fueled the First Quarter Storm and the young adults of contemporary Philippines: once, they say, the paradigmatic activity of college and young professionals was public protest against oppression and injustice; but today, one finds the youth in Starbucks and the ever-ubiquitous malls.)

Even if it were politically active, the urban middle class has declined in relative strength with the politicization of the rural electorate, which tends to be less pro-Opposition than the urban sectors. The presence of this new countervailing force allowed GMA to fight the 2005 ouster-movement by counter-mobilizing the provinces, somewhat as the 14th-century Valois mobilized rural France against the Jacquerie; and with the dominance of patrimonial politics in rural Philippines, which, as I explained in another essay, is under Presidential control, she can well use the provinces again to resist urban protest. Another additional factor has been the rise of urban poor as a potential force. Being less inclined to liberal-democratic ideology and oriented to bread-and-butter issues, the urban poor’s very existence as a mobilizable force serves to weaken the claim of the urban middle class to represent the public will. In a word, we are seeing in the Philippines the beginnings of the process that, in Europe, led to the displacement of middle-class Liberal power with the Conservative, Catholic and Socialist movements.

A very poignant reflection by Luz Rimban on journalists and their having to pry into the sorrows of individuals in times of crisis or disaster. See Rabid Pirate Tanuki on the reactions of an office mate, a survivor of the blast; I feel blest publishes a letter by a bereaved husband (her harrowing account of the husband and his ordeal is in this entry). helen’s site has harrowing rescue photos, and Life No. 2 reflects on how people coped with the tragedy.

mlq3

271 comments

devilsadvocate, i said earlier that i am having fun… because you have no experience. When you go abroad you will find later on what it means by hard labor….it includes getting shit in your face (then you can remember me). Your call center job is like luxury in comparison. I let you find out… good luck, kid.

When you go abroad you will find later on what it means by hard laborÃ¢â‚¬Â¦.it includes getting shit in your face (then you can remember me). Your call center job is like luxury in comparison. I let you find outÃ¢â‚¬Â¦ good luck, kid.

aber, ano ba trabaho mo? ass-wiper?

hard labor in the Phils vs hard labor in the US. it’s a no-brainer which I would choose. unless your are contending that ass-wiping in the US is harder than ass-wiping in here.

if the point of issue is income, then it is personal, not government. You have to earn a living in a company that can provide the highest income possible for you and your family. Still, the valid point, why whiny because you are earning less. Do something about it. The government can not do it for you.

Penn World data has its limitation. It cannot capture both the earnings and consumption of Filipinos ABROAD which is a significant to the analysis.

consider that a limitation of the study, dodong. your comment is how a critique should be made, after all we are talking here of a study that compares standards of living ceteris paribus [for not all countries in alba’s study have strong ofw phenomenon going for them].

blatantly exalting academic position has nothing to do with the merits or demerits of the study. nakasakay ka man sa panel ng truck, ano ngayon? am sure you get my drift.

I’m not saying that the government should do the earning for the worker. It’s easy to say to look for the job that pays well, but it’s not there. However, it is the government’s role to set the conditions for the private business sector to prosper and generate more and better jobs that will put more money in the pockets of the ordinary worker. It’s not happening right now because of failed political leadership, bureaucratic incompetence, and systemic corruption.

Poverty will never be alleviated unless we get the kind of leadership that some of our neighbors have been blessed with.

“The other part, is why Filipinos think they are cheated paying 2.7% price increase while Americans are paying the same price increase percentage. Somehow, something is wrong with that because Filipino entrepenuer wanted something more also in delivering necessary goods and services to the market.”

dODONG,

To aid you in understanding the whole thing, you need to comapre the per capita income of the americans vs. juan dela cruz. Dollar-to-dolla i’m sure you will know why a price increase of any number is abominable to Filipinos than to the americans. Can you live with less than a dollar a day per capita?

I have an in law who is a nurse in UK. she is earning about 2,700 euro a month. At today’s exchange rate, this would amount to almost 200,000 Php. you will need tp be a ceo in the pilippines to be able to earn this amount.

My sister in law by tha way told me that you can live comfortable with 700 euro/month. An inflation of 3% is nothing t them because their salariea have a yearly increase of about 5%. Do we have that kind of opportunity here. So what if GDP is 7.5%, can an ordinaryjuan de la cruz afford decent meal?

inodoro on Ã¢â‚¬Å“for not all countries in albaÃ¢â‚¬â„¢s study have strong ofw phenomenon going for themÃ¢â‚¬Â.

inodoro on Ã¢â‚¬Å“has nothing to do with the merits or demerits of the studyÃ¢â‚¬Â.

check again, the statements are contradictory.

those are not contradictories, but are in fact unrelated statements. the first follows your critique, the second is for someone [not you] who thinks the way to make a critique is to lay down first one’s academic cards, like as if this appeal to authority (?????) makes for a sound analysis.

It is not my solution. There must be a good reason why every democratic country in the world had created their own constitution and adhere to it.

Peoples power polarized the nation. Instead of useless people power that created more destabilizations, people should constructively channel their energy of reclaiming the democratic channels of changing the leadership by constitutional means.